Ask The Experts: February 26, 2019

Tony HatchIndependent Transportation Analyst and Consultant

Q: What are your thoughts on current personnel changes in the rail industry?A:Personnel changes all over the industry! Time seems to be moving faster….

Amy Rice, head of CSX Intermodal Ops, (formerly head of the CSX lines sales program) and the star newcomer at the CSX Investor Day last year, has resigned; after all of the praise heaped on her by her superiors, this is a shock. There will likely be some more clarification on succession issues in CSX Ops soon.

John Orr, SVP and Chief Transportation Officer at CN, retired (announced today) after 30 years….one assumes he has the standard CN non-compete or he would already be a rich(er) man

GWR announced – after the webcast - that Dave Brown was longer serving as their COO (although he is still running important projects in Australia and the UK); there may be other ops leadership changes there, too….

Matt Bell was named head of the National Rail Construction (NRC) trade association; well-deserved, succeeding his old boss Chuck Baker, who is running the ASLRRA (short lines group)

KSU upgraded Sameh Fahmy from “PSR Consultant” to EVP-PSR!

Omnitrax, the short line holding company (part of the Broe Group) named two big rail players to its Board – our friend Dave Garin, retired Group VP/Industrial Products, BNSF, and Cameron Scott, the former UP EVP & COO; that’s pretty big firepower for an SLHC.

Q: What happened with rail traffic in January?A:January was, for rails, a month of two directions, as noted by the AAR’s RTI. There was strength in the first three weeks, weakness in the last two (Polar Vortex, government shutdown, trade uncertainty). Note that two of the three are self-inflicted; for why the third had an impact see CN video, below). For example, weeks 1-3 saw US carload growth of 8%, and IM of 6%; weeks 4-5 saw declines in both of 7%. Overall, 11/20 commodities were up (US); total (US + Canadian traffic (CL+IM) was up 1.9%, IM alone up 0.8%. But the contrasts with truck was sharp: the ATA reported that after a December lull, January truck tonnage grew 2.9% (or 5.5% seasonally-adjusted); truck capacity grew even more (Class 8 sales up 40% for the month, YOY).

Q: What has been happening with the Federal Railroad Administration lately? A: The Federal Railroad Administraion February PTC Update noted that all of the rails either met their 12/31/18 deadline or successfully extended for two years; 83% of the freight miles in the US are now covered. Nice guy/great railroader Ron Batory, the FRA Administrator, finds himself caught in the battle between the White House and California over, among other things, the Wall – he issued an order canceling $929mm in HSR (high speed rail) funding.